Academy Value Fund
Supplement to Prospectus dated August 1, 1995
The disclosure under the caption "How to Invest in the Fund" and "How to Redeem
an Investment in the Fund" in the Fund's prospectus dated August 1, 1995 is
supplemented by the following information. Shareholders should review those
portions of the prospectus for a complete discussion regarding purchases and
redemptions of fund shares.
Effective March 8, 1996, Star Bank, N.A., 425 Walnut Street, Cincinnati, OH
45202 will serve as Custodian of the Fund's assets and American Data Services,
Inc., 24 West Carver St., Huntington, NY 11743 will serve as the Fund's Transfer
and Shareholder Service Agent.
Shareholders should direct correspondence and inquiries as follows:
INVESTMENTS
BY MAIL: Initial and subsequent investments should be sent to Academy Value
Fund, P.O. Box 856, Cincinnati, OH 45264-0856.
BY WIRE: It is necessary to notify the Fund prior to each wire purchase. Wires
sent without notifying the Fund will result in a delay of the effective date of
your purchase.
Shareholders should instruct their bank to wire funds as follows:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Academy Value Fund
DDA # 483897906
Account name (shareholder name)
Shareholder account number
BY COURIER: All investments sent by overnight or other courier services should
be sent to Academy Value Fund, c/o Star Bank, N.A., 425 Walnut Street, Mutual
Fund Custody Dept. M.L. 6118, Cincinnati, OH 45202.
REDEMPTIONS:
DIRECT REDEMPTION: Requests for redemption of fund shares should be mailed to
Academy Value Fund, 24 West Carver St., Huntington, NY 11743.
TELEPHONE REDEMPTION: If you have completed the Redemption by Telephone portion
of the Fund's account application you may redeem shares on any business day the
New York Stock Exchange is open by calling the Transfer Agent at 1-800-385-7003
before 4:00 p.m. Eastern time.
All other shareholder account questions should be directed to 1-800-385-7003.
The disclosure under the caption "Management of the Fund" in the Prospectus is
revised as follows:
Effective March 8, 1996, Investment Company Administration Corporation ("ICAC")
will act as the Fund's Administrative Manager under substantially the same terms
and conditions as in the previous management agreement with Southampton
Investment Management Company. ICAC and Southampton have the same officers,
directors and employees. Under the current arrangement with Southampton, a
monthly fee is paid at the annual rate of 0.25% of average net assets or
$30,000, whichever is greater. Under the agreement with ICAC, a monthly fee will
be paid by the Fund to ICAC at the following annual rate:
Average net assets of each Fund Fee or fee rate
- ------------------------------- ---------------
Under $15 million $30,000
$15 to $50 million 0.20% of average net assets
$50 to $100 million 0.15% of average net assets
$100 million to $150 million 0.10% of average net assets
Over $150 million 0.05% of average net assets
March 8, 1996
<PAGE>
Acadamy Value Fund
500 North Valley Mills Dr., Ste. 208
P.O. Box 8175
Waco, TX 76714-8175
(817) 751-0555
The ACADEMY VALUE FUND (the "Fund") is a mutual fund with the investment
objective of seeking growth of capital. The Fund seeks to achieve its objective
by investing principally in common stocks. Academy Capital Management, Inc. (the
"Advisor") serves as investment advisor to the Fund.
This Prospectus sets forth basic information about the Fund that
prospective investors should know before investing. It should be read and
retained for future reference. The Fund is a series of Professionally Managed
Portfolios. A Statement of Additional Information dated January 1, 1996, as may
be amended from time to time, has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. This Statement of Additional
Information is available without charge upon written request to the Fund at the
address or telephone number given above.
TABLE OF CONTENTS
Expense Table........................................................ 2
Financial Highlights................................................. 3
Objective and Investment Approach of the Fund; Risk Factors.......... 4
Management of the Fund............................................... 7
Distribution Plan.................................................... 7
How To Invest in the Fund............................................ 8
How To Redeem an Investment in the Fund.............................. 9
Services Available to the Fund's Shareholders........................ 10
How the Fund's Per Share Value Is Determined......................... 11
Dividends, Distributions and Taxes................................. 11
General Information.................................................. 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated January 1, 1996
<PAGE>
EXPENSE TABLE
Expenses are one of several factors to consider when investing in the Fund.
The purpose of the following fee table is to provide an understanding of the
various costs and expenses which may be borne directly or indirectly by an
investment in the Fund. Actual expenses may be more or less than those shown.
The Fund has adopted a plan of distribution under which the Fund will pay the
Distributor a fee at an annual rate of up to 0.25% of the Fund's net assets. A
long-term shareholder may pay more, directly and indirectly, in sales charges
and such fees than the maximum sales charge permitted under the rules of the
National Association of Securities Dealers. Shares will be redeemed at net asset
value per share.
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases............................. None
Maximum Sales Load Imposed on Reinvested Dividend................... None
Deferred Sales...................................................... None
Redemption Fees..................................................... None
Annual Fund Operating Expenses
(As a percentage of average net assets)
Investment Advisory Fee............................................. 1.00%*
Fee to Manager...................................................... 0.25%
12b-1 Fee........................................................... 0.25%
Other expenses...................................................... 0.50%*
- --------------------------------------------------------------------------------
Total Fund Operating Expenses....................................... 2.00%*
================================================================================
*The Advisor has undertaken to waive its advisory fee until Fund operating
expenses decline to 1.30% of average net assets annually. Total Fund operating
expenses shown reflect the Advisory fee waiver for the current fiscal year. In
the absence of this waiver, it is estimated that the total fund operating
expenses would be 3.00% of average net assets.
Example
This table illustrates the net transaction and operating expenses that
would be incurred by an investment in the Fund over different time periods,
assuming a $1,000 investment, a 5% annual return, and redemption at the end of
each time period.
1 year 3 years 5 years 10 years
$20 $63 $108 $233
The Example shown above should not be considered a representation of past
or future expenses and actual expenses may be greater or less than those shown.
In addition, federal regulations require the Example to assume a 5% annual
return, but the Fund's actual return may be higher or lower. See "Management of
the Fund."
The ACADEMY VALUE FUND (the "Fund") is a diversified series of
Professionally Managed Portfolios (the "Trust"), an open-end management
investment company offering redeemable shares of beneficial interest. Shares may
be purchased and redeemed without a sales or redemption charge at their net
asset value. The minimum initial investment is $1000 with subsequent investments
of $100 or more ($500 and $100, respectively, for retirement plans).
<PAGE>
FINANCIAL HIGHLIGHTS
for a capital share outstanding throughout the period.
The following information has been audited by Coopers and Lybrand,
independent accountants, whose unqualified report covering the periods indicated
below is incorporated by reference herein and appears in the annual report to
shareholders. This information should be read in conjunction with the financial
statements and acccompanying notes which appear in the Statement of Additional
Information and are incorporated by reference therein. Further information about
the Fund's performance is contained in its annual report to shareholders, which
may be obtained without charge by writing or calling the address or telephone
number on the Prospectus cover page.
- --------------------------------------------------------------------------------
December 9, 1994*
through
August 31, 1995
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period........................... $10.00
Income from Investment Operations:
Net investment income.................................... .03
Net realized and unrealized gain on investments.......... 1.57
------
Total from investment operations............................... 1.60
------
Less Distributions:
Dividends from net investment income..................... -0-
Distributions from net capital gains..................... -0-
------
Total Distributions............................................ -0-
------
Net Asset Value, End of Period................................. $11.60
======
Total Return................................................... 22.68%+
Ratios/Supplemental Data:
Net assets, end of period (millions)........................... $ 3.2
Ratio of expenses to average net assets:
Before expense reimbursement............................. 5.20%+
After expense reimbursement.............................. 2.00%+
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement............................. (2.62)%+
After expense reimbursement.............................. 0.64%+
Portfolio turnover rate........................................ 13.26%
*Commencement of operations.
+Annualized.
<PAGE>
OBJECTIVE AND INVESTMENT APPROACH OF THE FUND; RISK FACTORS
The investment objective of the Fund is growth of capital. The Fund pursues
its objective by investing principally in common stocks, and in normal market
conditions at least 70% of the value of the Fund's total assets will be invested
in common stocks. The Fund also may invest in preferred stocks, warrants,
convertible debt obligations, and other debt obligations that, in the Advisor's
opinion, offer the possibility of capital growth. There is, of course, no
assurance that the Fund's objective will be achieved. Because prices of common
stocks and other securities fluctuate, the value of an investment in the Fund
will vary as the market value of its investment portfolio changes, and when
shares are redeemed, they may be worth more or less than their original cost.
The Fund is diversified, which under applicable federal law means that as to 75%
of its total assets, no more than 5% may be invested in the securities of a
single issuer and that no more than 10% of its total assets may be invested in
the voting securities of such issuer.
Investment Approach. The Advisor utilizes a value discipline of investment
management characterized by purchasing undervalued securities whose share price,
in the Advisor's opinion, does not reflect the intrinsic value of the companies'
assets and/or continuing operations. The discipline is to focus on undervalued
securities with the intent to purchase and hold until such time as the true
value of the firm is recognized by the investment community.
The Advisor conducts a computerized screening process which lists
securities having fundamental characteristics that are undervalued when compared
to the market as a whole. The screening process takes into account fundamental
characteristics including price/earnings, price/book, price/sales, and
price/cash flow ratios. Other factors include total market value, capital
structure, relative historical valuation, management expertise, and trading
volume. Each security is analyzed individually in terms of industry structure,
management quality, company history, market position, dividend history, product
mix, and investment community perception of the company. Technical analysis is
also used to aid in determining the best purchase and sale price of a particular
security. The portfolio generally will consist of a mix of large, mid-sized and
small capitalization securities.
During those times when equity securities cannot be found that meet the
Advisor's investment criteria, for temporary defensive purposes or pending
longer-term investment, the Fund may invest any amount of its assets in
short-term money market instruments, including securities issued by the U.S.
Government, its agencies and instrumentalities or other such instruments rated
in the top two grades by Moody's or S & P or, if unrated, instruments deemed to
be of comparable quality by the Fund's Advisor.
Repurchase Agreements. The Fund may enter into repurchase agreements in
order to earn additional income on available cash, or as a defensive investment
in periods when the Fund is primarily invested in short-term maturities. A
repurchase agreement is a short-term investment in which the purchaser (i.e.,
the Fund) acquires ownership of a U.S. Government security (which may be of any
maturity) and the seller agrees to repurchase the obligation at a future time at
a set price, thereby determining the yield during the purchaser's holding period
(usually not more than seven days from the date of purchase). Any repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase agreement. In the
event of a bankruptcy or other default of the seller, the Fund could experience
both delays in liquidating the underlying security and losses in value. However,
the Fund intends to enter into repurchase agreements only with banks with assets
of $500 million or more that are insured by the Federal Deposit Insurance
Corporation and the most creditworthy registered securities dealers pursuant to
procedures
<PAGE>
adopted and regularly reviewed by the Trust's Board of Trustees. The Advisor
monitors the creditworthiness of the banks and securities dealers with whom the
Fund engages in repurchase transactions, and the Fund will not invest more than
15% of its net assets in illiquid securities, including repurchase agreements
maturing in more than seven days.
Illiquid and Restricted Securities. The Fund may not invest more than 15%
of its net assets in illiquid securities, including (i) securities for which
there is no readily available market; (ii) securities the disposition of which
would be subject to legal restrictions (so-called "restricted securities"); and
(iii) repurchase agreements having more than seven days to maturity. A
considerable period of time may elapse between the Fund's decision to dispose of
such securities and the time when the Fund is able to dispose of them, during
which time the value of the securities could decline. Restricted securities do
not include those which meet the requirements of Securities Act Rule 144A and
which the Trustees have determined to be liquid based on the applicable trading
markets.
Foreign Securities. The Fund may invest up to 25% of its assets in U.S.
dollar-denominated securities of foreign issuers, including American Depositary
Receipts with respect to securities of foreign issuers. There may be less
publicly available information about these issuers than is available about
companies in the U.S. and foreign auditing requirements may not be comparable to
those in the U.S. In addition, the value of the foreign securities may be
adversely affected by movements in the exchange rates between foreign currencies
and the U.S. dollar, as well as other political and economic developments,
including the possibility of expropriation, confiscatory taxation, exchange
controls or other foreign governmental restrictions. The Fund may also invest
without limit in securities of foreign issuers which are listed and traded on a
domestic national securities exchange.
Short Sales. The Fund may engage in short sales of securities. In a short
sale, the Fund sells stock which it does not own, making delivery with
securities "borrowed" from a broker. The Fund is then obligated to replace the
security borrowed by purchasing it at the market price at the time of
replacement. This price may or may not be less than the price at which the
security was sold by the Fund. Until the security is replaced, the Fund is
required to pay to the lender any dividends or interest which accrue during the
period of the loan. In order to borrow the security, the Fund may also have to
pay a premium which would increase the cost of the security sold. The proceeds
of the short sale will be retained by the broker, to the extent necessary to
meet margin requirements, until the short position is closed out.
The Fund also must deposit in a segregated account an amount of cash or
U.S. Government Securities equal to the difference between (a) the market value
of the securities sold short at the time they were sold short and (b) the value
of the collateral deposited with the broker in connection with the short sale
(not including the proceeds from the short sale). While the short position is
open, the Fund must maintain daily the segregated account at such a level that
(1) the amount deposited in it plus the amount deposited with the broker as
collateral equals the current market value of the securities sold short and (2)
the amount deposited in it plus the amount deposited with the broker as
collateral is not less than the market value of the securities at the time they
were sold short.
The Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and date on which the
Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. The amount of any gain will be
decreased and the amount of any loss will be increased by any interest the Fund
may be required to pay in connection with short sale.
<PAGE>
The dollar amount of short sales at any one time (not including short sales
against the box) may not exceed 25% of the net equity of the Fund. The value of
securities of any one issuer in which the Fund is short may not exceed the
lesser of 2% of the value of the Fund's net assets or 2% of the securities of
any class of any issuer.
A short sale is "against-the-box" if at all times when the short position
is open the Fund owns an equal amount of the securities or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short.
Options Transactions. The Fund may buy call and put options on individual
securities, stock indices and index futures and write covered call and put
options, and engage in related closing transactions. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security at the exercise price at any time during the option period.
Conversely, a put option gives the purchaser of the option the right to sell,
and obligates the writer to buy, the underlying security at the exercise price
at any time during the option period. A covered call option sold by the Fund,
which is a call option with respect to which the Fund owns the underlying
security, exposes the Fund during the term of the option to possible loss of
opportunity to realize appreciation in the market price of the underlying
security or to possible continued holding of a security which might otherwise
have been sold to protect against depreciation in the market price of the
security. A covered put option sold by the Fund exposes the Fund during the term
of the option to a decline in the price of the underlying security. A put option
sold by the Fund is covered when, among other things, cash or liquid securities
are placed in a segregated account with the Fund's custodian to fulfill the
obligation undertaken.
To close out a position when writing covered options, the Fund may make a
"closing purchase transaction," which involves purchasing an option on the same
security with the same exercise price and expiration date as the option which it
has previously written on the security. To close out a position as a purchaser
of an option, the Fund may make a "closing sale transaction," which involves
liquidating the Fund's position by selling the option previously purchased. The
Fund will realize a profit or loss from a closing purchase or sale transaction
depending upon the difference between the amount paid to purchase an option and
the amount received from the sale thereof.
Portfolio Turnover. The annual rate of portfolio turnover is not expected
to exceed 50%. In general, the Advisor will not consider the rate of portfolio
turnover to be a limiting factor in determining when or whether to purchase or
sell securities in order to achieve the Fund's objective.
Risk Factors. Securities in which the Fund invests, and its share price and
returns, are subject to fluctuation. Investments in equity securities in general
are subject to market risks that may cause their prices to fluctuate over time.
The value of debt securities changes as interest rates fluctuate, and in
general, the longer the remaining maturity of a debt security, the greater the
effect of changes in interest rates on its market value. Debt securities are
also subject to credit risk relative to the ability of the issuer to make timely
interest payments and repay principal upon maturity. To the extent the Fund
invests in undervalued companies, there may be a substantial time period before
the securities of such companies return to price levels believed by the Advisor
to represent their true value. Therefore an investment in the Fund is more
suitable for longer term investors seeking capital growth who can bear the risk
of short term fluctuations in principal and net asset value.
The Fund has adopted certain investment restrictions, which are described
fully in the Statement of Additional Information. Like the Fund's investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.
<PAGE>
MANAGEMENT OF THE FUND
The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. Academy Capital Management,
500 North Valley Mills Drive, Suite 208, Waco, TX 76710, the Fund's Advisor, has
been in the investment advisory business since 1986. While the Advisor has not
previously advised a registered investment company, it provides investment
advisory services to individual and institutional investors with assets of over
$125,000,000. The Advisor is controlled by Mr. Joel Adam and Mr. Scott
Granowski, who are responsible for management of the Fund's portfolio.
The Advisor provides the Fund with advice on buying and selling securities,
manages the investments of the Fund, furnishes the Fund with office space and
certain administrative services, and provides most of the personnel needed by
the Fund. As compensation, the Fund pays the Advisor a monthly management fee
(accrued daily) based upon the average daily net assets of the Fund at the rate
of 1.00% annually. This fee rate is higher than that paid by most investment
companies. However, the Advisor has undertaken to waive its advisory fee until
Fund operating expenses decline to 1.30% of average net assets annually.
Southampton Investment Management Company (the "Manager") acts as the
Fund's Manager under a Management Agreement. Under that agreement, the Manager
prepares various federal and state regulatory filings, reports and returns for
the Fund, prepares reports and materials to be supplied to the trustees,
monitors the activities of the Fund's custodian, transfer agent and accountants,
and coordinates the preparation and payment of Fund expenses and reviews the
Fund's expense accruals. For its services, the Manager receives an annual fee
equal to the greater of 0.25 of 1% of the Fund's average daily net assets or
$30,000.
The Fund is responsible for its own operating expenses. The Advisor has
agreed to limit the Fund's ratio of operating expenses to average net assets so
that it will not exceed the limit imposed by the most restrictive applicable
state regulation. Further, the Advisor has voluntarily undertaken to limit the
Fund's operating expenses to 2.00% of the Fund's average net assets annually.
This undertaking may be modified or withdrawn by the Advisor upon notice to
shareholders. The Advisor also may reimburse additional amounts to the Fund at
any time in order to reduce the Fund's expenses, or to the extent required by
applicable securities laws. Any such reductions made by the Advisor in its fees
or payments or reimbursement of expenses which are the Fund's obligation are
subject to reimbursement by the Fund.
The Advisor considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional Information, the factors include, but
are not limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive prices, the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan pursuant to Rule 12b-1. The Plan
provides that the Fund may pay distribution and related expenses of up to an
annual rate of 0.25% of the Fund's average net assets. Expenses permitted to be
paid by the Fund under its Plan include: preparation, printing and mailing of
prospectuses; shareholder reports such as semiannual and annual reports,
performance reports and newsletters; sales literature
<PAGE>
and other promotional material to prospective investors; direct mail
solicitation; advertising; public relations; compensation of sales personnel,
advisors or other third parties for their assistance with respect to the
distribution of the Fund's shares; payments to financial intermediaries for
shareholder support; administrative and accounting services with respect to the
shareholders of the Fund; and such other expenses as may be approved from time
to time by the Board of Trustees.
The Advisor, out of its own funds, also may compensate broker-dealers who
have signed dealer agreements for the distribution of the Fund's shares as well
as other service providers who provide shareholder and administrative services.
HOW TO INVEST IN THE FUND
The minimum initial investment is $1000. Subsequent investments must be at
least $100. Investments by retirement plans may be for minimums of $500 and
$100, respectively. First Fund Distributors, Inc. (the "Distributor"), acts as
Distributor of the Fund's shares. The Distributor may, at its discretion, waive
the minimum investment requirements for purchases in conjunction with certain
group or periodic plans. In addition to cash purchases, shares may be purchased
by tendering payment in kind in the form of securities, provided that any such
securities are consistent with the Fund's investment objective and policies, are
acquired for investment and not resale, and are liquid, unrestricted and have a
readily determinable value by exchange or NASDAQ listing.
Shares of the Fund are offered continuously for purchase at their net asset
value per share next determined after a purchase order is received. The public
offering price is effective for orders received by the Fund prior to the time of
the next determination of the Fund's net asset value. Orders received after the
time of the next determination of the applicable Fund's net asset value will be
entered at the next calculated public offering price. Investors may be charged a
fee if they effect a transaction in fund shares through a broker or agent.
Investors may purchase shares of the Fund by check or wire:
By Check: For initial investments, an investor should complete the Fund's
Account Application (included with this Prospectus). The completed application,
together with a check payable to "Academy Value Fund," should be mailed to the
Fund's Transfer Agent: The Provident Bank, Mutual Fund Services, P.O. Box 14967,
Cincinnati, OH 45250-0967.
For subsequent investments, a stub is attached to the account statement
sent to shareholders after each transaction. The stub should be detached from
the statement and, together with a check payable to "Academy Value Fund," mailed
to the Provident Bank in the envelope provided at the address indicated above.
The investor's account number should be written on the check.
By Wire: For initial investments, before wiring funds, an investor should
call the Transfer Agent at (800) 424-2295 to advise the Transfer Agent that an
initial investment will be made by wire and to receive an account number. The
Transfer Agent will request the investor's name and the dollar amount to be
invested and provide an order confirmation number. The investor should then
complete the Fund's Account Application (included with this Prospectus),
including the date and the order confirmation number on the application. The
completed Account Application should be mailed to the address shown at the top
of the Account Application. The investor's
<PAGE>
bank should transmit immediately available funds by wire for purchase of shares,
in the investor's name to the Fund's Custodian, as follows:
The Provident Bank
Attn: Mutual Fund Services
ABA Routing Number: 042-000-424
for further credit to Academy Value Fund
Account Number [Name of Shareholder]
For subsequent investments, the investor's bank should wire funds as
indicated above. It is not necessary to contact the Transfer Agent prior to
making subsequent investments by wire, but it is essential that complete
information regarding the investor's account be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Investors may obtain further information from the Transfer Agent about remitting
funds in this manner and from their own banks about any fees that may be
imposed.
General. Payment of proceeds from redemption of shares purchased with an
initial investment made by wire may be delayed until one business day after the
completed Account Application is received by the Fund. All investments must be
made in U.S. dollars and, to avoid fees and delays, checks should be drawn only
on U.S. banks and should not be made by third party check. A charge may be
imposed if any check used for investment does not clear. The Fund and the
Distributor reserve the right to reject any purchase order in whole or in part.
If an order, together with payment in proper form, is received by the
Transfer Agent by the close of trading on the New York Stock Exchange (currently
4:00 p.m., New York City time), Fund shares will be purchased at the offering
price determined as of the close of trading on that day. Otherwise, Fund shares
will be purchased at the offering price determined as of the close of trading on
the New York Stock Exchange on the next business day.
Federal tax laws requires that investors provide a certified Taxpayer
Identification Number and certain other required certifications upon opening or
reopening an account in order to avoid backup withholding of taxes at the rate
of 31% on taxable distributions and proceeds of redemptions. See the Fund's
Account Application for further information concerning this requirement.
The Fund is not required to issue share certificates. All shares are
normally held in non-certificated form registered on the books of the Fund and
the Fund's Transfer Agent for the account of the shareholder.
HOW TO REDEEM AN INVESTMENT IN THE FUND
A shareholder has the right to have the Fund redeem all or any portion of
his outstanding shares at their current net asset value on each day the New York
Stock Exchange is open for trading. The redemption price is the net asset value
per share next determined after the shares are validly tendered for redemption.
Direct Redemption. A written request for redemption must be received by the
Fund's Transfer Agent in order to constitute a valid tender for redemption. To
protect the Fund and its shareholders, a signature guarantee is required for
certain transactions, including redemptions. Signature(s) on the redemption
request must be guaranteed by an "eligible guarantor institution" as defined in
the federal securities laws. These institutions include banks, broker-dealers,
credit unions and savings institutions. A broker-dealer guaranteeing signatures
must be a member of a clearing corporation or maintain net capital of at least
$100,000. Credit unions must be
<PAGE>
authorized to issue signature guarantees. Signature guarantees will be accepted
from any eligible guarantor institution which participates in a signature
guarantee program. A notary public is not an acceptable guarantor.
Telephone Redemption. Shareholders who complete the Redemption by Telephone
portion of the Fund's Account Application may redeem shares on any business day
the New York Stock Exchange is open by calling the Fund's Transfer Agent at
(800) 424-2295 before 4:00 p.m. Eastern time. Redemption proceeds will be mailed
or wired at the shareholder's direction the next business day to the
predesignated account. The minimum amount that may be wired is $1,000 (wire
charges, if any, will be deducted from redemption proceeds).
By establishing telephone redemption privileges, a shareholder authorizes
the Fund and its Transfer Agent to act upon the instruction of any person by
telephone to redeem from the account for which such service has been authorized
and transfer the proceeds to the bank account designated in the Authorization.
The Fund and the Transfer Agent will use procedures to confirm that redemption
instructions received by telephone are genuine, including recording of telephone
instructions and requiring a form of personal identification before acting on
such instructions. Neither the Fund nor the Transfer Agent will be liable for
any loss, expense, or cost arising out of any telephone redemption or exchange
request, including any fraudulent or unauthorized requests that are reasonably
believed to be genuine, provided that such procedures are followed. The Fund may
change, modify, or terminate these privileges at any time upon at least 60 days'
notice to shareholders.
Shareholders may request telephone redemption privileges after an account
is opened; however, the authorization form will require a separate signature
guarantee. Shareholders may experience delays in exercising telephone redemption
privileges during periods of abnormal market activity.
General. Payment of the redemption proceeds will be made promptly, but not
later than seven days after the receipt of all documents in proper form,
including a written redemption order with appropriate signature guarantee in
cases where telephone redemption privileges are not being utilized. The Fund may
suspend the right of redemption under certain extraordinary circumstances in
accordance with the Rules of the Securities and Exchange Commission. In the case
of shares purchased by check and redeemed shortly after purchase, the Fund will
not mail redemption proceeds until it has been notified that the check used for
the purchase has been collected, which may take up to 15 days from the purchase
date. To minimize or avoid such delay, investors may purchase shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for Federal income tax purposes.
Due to the relatively high cost of maintaining smaller accounts, the Fund
reserves the right to redeem shares in any account, other than retirement plan
or Uniform Gifts/Transfers to Minors Act accounts, if at any time, due to
redemptions by the shareholder, the total value of a shareholder's account does
not equal at least $1,000. If the Fund determines to make such an involuntary
redemption, the shareholder will first be notified that the value of his account
is less than $1,000 and will be allowed 30 days to make an additional investment
to bring the value of his account to at least $1,000 before the Fund takes any
action.
SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS
Retirement Plans. The minimum initial investment for such plans is $500,
with minimum subsequent investments of $100. The Fund offers a prototype
Individual Retirement Account ("IRA") plan and information is available from the
Distributor or from your securities dealer with respect to Keogh, Section 403(b)
and other retirement plans offered. Investors should consult a tax adviser
before establishing any retirement plan.
<PAGE>
Check-A-Matic Plan. For the convenience of shareholders, the Fund offers a
preauthorized check service under which a check is automatically drawn on the
shareholder's personal checking account each month for a predetermined amount
(but not less than $100), as if the shareholder had written it himself. Upon
receipt of the withdrawn funds, the Fund automatically invests the money in
additional shares of the Fund at the current offering price. Applications for
this service are available from the Distributor. There is no charge by the Fund
for this service. The Distributor may terminate or modify this privilege at any
time, and shareholders may terminate their participation by notifying the
Transfer Agent in writing, sufficiently in advance of the next scheduled
withdrawal.
Systematic Withdrawal Program. As another convenience, the Fund offers a
Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholder's account must have Fund shares with a value of at least $10,000
in order to start a Systematic Withdrawal Program, and the minimum amount that
may be withdrawn each month or quarter under the Systematic Withdrawal Program
is $100. This Program may be terminated or modified by a shareholder or the Fund
at any time without charge or penalty.
A withdrawal under the Systematic Withdrawal Program involves a redemption
of shares, and may result in a gain or loss for federal income tax purposes. In
addition, if the amount withdrawn exceeds the dividends credited to the
shareholder's account, the account ultimately may be depleted.
HOW THE FUND'S PER SHARE VALUE IS DETERMINED
The net asset value of a Fund share is determined once daily as of the
close of public trading on the New York Stock Exchange (currently 4:00 p.m.
Eastern time) on each day the New York Stock Exchange is open for trading. Net
asset value per share is calculated by dividing the value of the Fund's total
assets, less its liabilities, by the number of Fund shares outstanding.
Portfolio securities are valued using current market values, if available.
Securities for which market quotations are not readily available are valued at
fair values as determined in good faith by or under the supervision of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions. Dividends from net investment income are
declared and paid at least annually, typically at the end of the Fund's fiscal
year (August 31). Any undistributed net capital gains realized during the Fund's
fiscal year will also be distributed to shareholders after the end of the year,
with a supplemental distribution on or about December 31 of any undistributed
net investment income as well as any additional undistributed capital gains
earned during the 12-month period ended each October 31.
Dividends and capital gain distributions (net of any required tax
withholding) are automatically reinvested in additional shares of the Fund at
the net asset value per share on the reinvestment date unless the shareholder
has previously requested in writing to the Transfer Agent that payment be made
in cash.
Any dividend or distribution paid by the Fund has the effect of reducing
the net asset value per share on the reinvestment date by the amount of the
dividend or distribution. Investors should note that a dividend or distribution
paid on shares purchased shortly before such dividend or distribution was
declared will be subject to income taxes as discussed below even though the
dividend or distribution represents, in substance, a partial return of capital
to the shareholder.
<PAGE>
Taxes. The Fund intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As long as the fund continues to qualify, and as long as
the Fund distributes all of its income each year to the shareholders, the Fund
will not be subject to any federal income tax or excise taxes based on net
income. The distributions made by the Fund will be taxable to shareholders
whether received in shares (through dividend reinvestment ) or in cash.
Distributions derived from net investment income, including net short-term
capital gains, are taxable to shareholders as ordinary income. A portion of
these distributions may qualify for the intercorporate dividends-received
deduction. Distributions designated as capital gains dividends are taxable as
long-term capital gains regardless of the length of time shares of the Fund have
been held. Although distributions are generally taxable when received, certain
distributions made in January are taxable as if received the prior December.
Shareholders will be informed annually of the amount and nature of the Fund's
distributions. Additional information about taxes is set forth in the Statement
of Additional Information. Shareholders should consult their own advisers
concerning federal, state and local taxation of distributions from the Fund.
GENERAL INFORMATION
The Trust. The Trust was organized as a Massachusetts business trust on
February 17, 1987. The Agreement and Declaration of Trust permits the Board of
Trustees to issue an unlimited number of full and fractional shares of
beneficial interest, without par value, which may be issued in any number of
series. The Board of Trustees may from time to time issue other series, the
assets and liabilities of which will be separate and distinct from any other
series. The fiscal year end of the Fund ends on August 31.
Shareholder Rights. Shares issued by the Fund have no preemptive,
conversion, or subscription rights. Shareholders have equal and exclusive rights
as to dividends and distributions as declared by the Fund and to the net assets
of the Fund upon liquidation or dissolution. The Fund, as a separate series of
the Trust, votes separately on matters affecting only the Fund (e.g., approval
of the Management and Advisory Agreements); all series of the Trust vote as a
single class on matters affecting all series jointly or the Trust as a whole
(e.g., election or removal of Trustees). Voting rights are not cumulative, so
that the holders of more than 50% of the shares voting in any election of
Trustees can, if they so choose, elect all of the Trustees. While the Trust is
not required and does not intend to hold annual meetings of shareholders, such
meetings may be called by the Trustees in their discretion, or upon demand by
the holders of 10% or more of the outstanding shares of the Trust for the
purpose of electing or removing Trustees.
Performance Information. From time to time, the Fund may publish its total
return in advertisements and communications to investors. Total return
information will include the Fund's average annual compounded rate of return
over the most recent four calendar quarters and over the period from the Fund's
inception of operations. The Fund may also advertise aggregate and average total
return information over different periods of time. The Fund's total return will
be based upon the value of the shares acquired through a hypothetical $1,000
investment at the beginning of the specified period and the net asset value of
such shares at the end of the period, assuming reinvestment of all
distributions. Total return figures will reflect all recurring charges against
Fund income. Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
prior period should not be considered as a representation of what an investor's
total return may be in any future period.
Shareholder Inquiries. Shareholder inquiries should be directed to the
Transfer Agent at (800) 424-2295.
<PAGE>
Advisor
Academy Capital Management
500 North Valley Mills Drive
Suite 208
Waco, TX 76710
(817) 751-0555
o
Distributor
First Fund Distributors, Inc.
4455 E. Camelback Rd., Ste. 261E
Phoenix, AZ 85018
o
Custodian and Transfer Agent
The Provident Bank
P.O. Box 14967
Cincinnati, OH 45250-0967
(800) 424-2295
o
Auditors
Ernst & Young LLP
515 South Flower Street
Los Angeles, CA 90071
o
Legal Counsel
Heller, Ehrman, White & McAuliffe
333 Bush Street
San Francisco, CA 94104
ACADAMY VALUE FUND
Prospectus
January 1, 1996
